Unit-2

Nature and Development of Management Thought

2.1 Historical Perspective

• Managementandorganizationsareproductsoftheirhistoricalandsocialtimesandplaces.Thus,we
• canunderstandtheevolutionofmanagementtheoryintermsofhowpeoplehavewrestledwith
• mattersofrelationshipsatparticulartimesinhistory.Oneofthecentrallessonsofthischapter,and
• ofthisbookasawholeisthatwecanlearnfromthetrialsandtribulationsofthosewhohave
• precededusinsteeringthefortunesofformalorganizations.Asyoustudymanagementtheoryyou
• willlearnthatalthoughtheparticularconcernsofHenryFordandAlfredSloanareverydifferentfrom
• thosefacingmanagersinthemid‐1990s,wecanstillseeourselvescontinuingthetraditionsthat
• theseindividualsbeganlongbeforeourtime.Bykeepinginmindaframeworkofrelationshipsand
• time,wecanputourselvesintheirshoesasstudentsofmanagement.
• ImaginethatyouareamanageratanAmericansteelmill,textilefactory,oroneofFord'splantsin
• theearlytwentiethcentury.Yourfactoryemploysthousandsofworkers.Thisisascaleofenterprise
• unprecedentedinWesternhistory.Manyofyouremployeeswereraisedinagriculturalcommunities.
• Industrialroutinesarenewtothem.Manyofyouremployees,aswell,areimmigrantsfromother
• lands.TheydonotspeakEnglishwell,ifatall.Asamanagerunderthesecircumstances,youwill
• probablybeverycuriousabouthowyoucandevelopworkingrelationshipswiththesepeople.Your
• managerialeffectivenessdependsonhowwellyouunderstandwhatitisthatisimportanttothesemanagerialeffectivenessdependson
howwellyouunderstandwhatitisthatisimportanttothese
 ople.Current‐daychallengesparallelsomeofthosefacedintheearlytwentiethcentury.Inthe
80s8.7millionforeignnationalsenteredtheU.S.andjoinedthelabormarket.Theyoftenhave
tinctneedsforskillsandlanguageproficiency,muchasthosebeforethemattheadventofthe
dustrialage.
rlymanagementtheoryconsistedofnumerousattemptsatgettingtoknowthesenewcomersto
dustriallifeattheendofthenineteenthcenturyandbeginningofthetwentiethcenturyinEurope
dtheUnitedStates.Inthissection,wewillsurveyanumberofthebetter‐knownapproachesto
rlymanagementtheory.Theseincludescientificmanagement,classicalorganizationtheory,the
havioralschool,andmanagementscience.Asyoustudytheseapproaches,keeponeimportantfact
mind:themanagersandtheoristwhodevelopedtheseassumptionsabouthumanrelationships
eredoingsowithlittleprecedent.Large‐scaleindustrialenterprisewasverynew.Someofthe
sumptionsthattheymademightthereforeseemsimpleorunimportanttoyou,buttheywere
ucialtoFordandhiscontemporaries.
ONTRIBUTIONSOFSCIENTIFICMANAGEMENTTHEORY
emodemassemblylinepoursoutfinishedproductsfasterthanTaylorcouldeverhaveimagined.
isproduction"miracle"isjustonelegacyofscientificmanagement.Inaddition,itsefficiency
chniqueshavebeenappliedtomanytasksinnon‐industrialorganizations,rangingfromfast‐food
rvicetothetrainingofsurgeons.
MITATIONSOFSCIENTIFICMANAGEMENTTHEORY
houghTaylor'smethodledtodramaticincreasesinproductivityandtohigherpayinanumberof
tances,workersandunionsbegantoopposehisapproachbecausetheyfearedthatworking
rderorfasterwouldexhaustwhateverworkwasavailable,causinglayoffs.
oreover,Taylor'ssystemclearlymeantthattimewasoftheessence.Hiscriticsobjectedtothe
peedup"conditionsthatplacedunduepressuresonemployeestoperformatfasterandfaster
els.Theemphasisonproductivity—and,byextension,profitability—ledsomemanagerstoexploit
2.2Evolution Of Management
• Introduction to Scientific Management by Taylor
• Fredrick Winslow Taylor ( March 20, 1856 - March 21, 1915) commonly known as ’Father of Scientific
Management’ started his career as an operator and rose to the position of chief engineer. He
conducted various experiments during this process which forms the basis of scientific management. It
implies application of scientific principles for studying & identifying management problems.

• According to Taylor, “Scientific Management is an art of knowing exactly what you want your men to do
and seeing that they do it in the best and cheapest way”. In Taylors view, if a work is analysed
scientifically it will be possible to find one best way to do it.

• Hence scientific management is a thoughtful, organized, dual approach towards the job of
management against hit or miss or Rule of Thumb.
According to Drucker, “The cost of scientific management is the organized study of work, the analysis of work
into simplest element & systematic management of worker’s performance of each element”.

Who Was Henri Fayol?

Fayol was an engineer who worked his way up to become manager of the Compagnie de Commentry-
Fourchambault-Decazeville mining company in France, at the tail end of the industrial revolution. Under his
watch, the struggling firm prospered.

He wrote, "When I assumed the responsibility for the restoration of Decazeville, I did not rely on my technical
superiority... I relied on my ability as an organizer [and my] skill in handling men." [1]

Fayol's 14 Principles of Management identified the skills that were needed to manage well. As well as inspiring
much of today's management theory, they offer tips that you can still implement in your organization. Fayol also
created a list of the five primary Functions of Management, which go hand in hand with the Principles.

What Is Administrative Theory?

Fayol called managerial skills "administrative functions." In his 1916 book, "Administration Industrielle et
Générale," he shared his experiences of managing a workforce.

Fayol’s book – and his 14 Principles of Management – helped to form what became known as Administrative
Theory. It looks at the organization from the top down, and sets out steps for managers to get the best from
employees and to run a business efficiently.
What Is Administrative Theory?
Fayol called managerial skills "administrative functions." In his 1916 book, "Administration Industrielle et Générale," he
shared his experiences of managing a workforce.

Fayol’s book – and his 14 Principles of Management – helped to form what became known as Administrative Theory. It looks
at the organization from the top down, and sets out steps for managers to get the best from employees and to run a
business efficiently.

Note:
Administrative Theory is characterized by people "on the ground" who share personal experiences, improve practices, and
help others to run an organization. This contrasts with the Scientific Management school led by Frederick Taylor , which
experimented with how individuals work to boost productivity.

What Are Fayol's 14 Principles of Management?

It was the reality of Fayol's day-to-day managing, seeing what worked and what didn't, that informed his 14 Principles of
Management. By focusing on administrative over technical skills, the Principles are some of the earliest examples of treating
management as a profession. They are:

Division of Work – Assign each employee a task that they can become proficient at. Productivity increases as employees
become more skilled, assured and efficient. Today, experts still warn against multi-tasking .
Authority – Managers must possess the authority to give orders, and recognize that with authority comes responsibility. As
well as rank, Fayol argues that a manager's intelligence, experience and values should command respect.
Discipline – Everyone should follow the rules . To help, you can make agreements between the organization and
employees clear for all to see. [2]
Unity of Command – Fayol wrote that "an employee should receive orders from one supervisor only." Otherwise,
authority, discipline, order, and stability are threatened.
Unity of Direction – Teams with the same objective should be working under the direction of one manager, using one
plan. That, Fayol wrote, "is the condition essential to unity of action, coordination of strength and focusing of effort."
Collective Interest Over Individual Interest – Individuals should pursue team interests over personal ones – including
managers.
Remuneration – Employee satisfaction depends on fair remuneration for everyone – financial and non-financial. Fayol
said pay should be fair and reward "well-directed effort."
Centralization – Balancing centralized decision making (from the top) with letting employees make decisions. Or as
Fayol wrote, "A place for everyone and everyone in his place."
Scalar Chain – Employees should know where they stand in the organization's hierarchy and who to speak to within a
chain of command. Fayol suggested the now-familiar organization chart as a way for employees to see this structure
clearly. [3]
Order – Fayol wrote that, "The right man in the right place" forms an effective social order. He applied the same maxim
to materials: right one, right place. Academics note that this principle pre-empted the Just in Time (JIT) strategy for
efficient production. [4]
Equity – Managers should be fair to all employees through a "combination of kindliness and justice." Only then will the
team "carry out its duties with... devotion and loyalty."
Stability of Tenure of Personnel – Organizations should minimize staff turnover and role changes to maximize efficiency.
If people are secure and good at their jobs, they are happier and more productive.
 Initiative – Employees should be encouraged to develop and carry out plans for improvement. As Fayol wrote,
"At all levels of the organizational ladder, zeal and energy on the part of employees are augmented by
initiative."
Esprit de Corps – Organizations should strive to promote team spirit, unity, and morale.

2.3 System Approach to Management with reference to management,organization and

MIS : Definition, Features and Evaluation!
In the 1960, an approach to management appeared which try to unify the prior schools of thought. This approach is
commonly known as ‘Systems Approach’. Its early contributors include Ludwing Von Bertalanfty, Lawrence J. Henderson,
W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D. Thompson.
They viewed organisation as an organic and open system, which is composed of interacting and interdependent parts,
called subsystems. The system approach is top took upon management as a system or as “an organised whole” made up
of sub- systems integrated into a unity or orderly totality.
Systems approach is based on the generalization that everything is inter-related and inter­dependent. A system is
composed of related and dependent element which when in interaction, forms a unitary whole. A system is simply an
assemblage or combination of things or parts forming a complex whole.
One its most important characteristic is that it is composed of hierarchy of sub-systems. That is the parts forming the
major system and so on. For example, the world can be considered-to be a system in which various national economies
are sub-systems.
Systems approach to management developed after 1950. Many pioneers during as E.L Trist, AK Ria, F.E. Kast, and R.A
Johnsm have made significant contributions to this approach.
This systems approach looks upon the management as a ‘System’ of as an organized whole make up of sub-systems
integrated into a unity or orderly totality. The attention should be given so overall effectiveness of the system rather than
effectiveness of any sub-system if isolation. It took where management process school left off in attempting to unify
management theory. It emphasizes the inter-relatedness and inter-dependence of all activities within an organisation. It is
based on system analysis. It attempts to identify the nature of relationships of various parts of the system. A system is a
set of inter-connected elements or component parts to achieve certain goals. An organisation is viewed by the modern
authors as an open system. An organisation as a system has five basic parts:
1.Input,
2.Process,
3.Output,
4.Feedback and
5.Environment.
Systems approach to management provides a conceptual basis as well as guidelines for establishing a more efficient
system for planning, organisation, directing and controlling. It forces the manager to look upon his business as an open
adaptive system. Information is an important part of the system because an organisation must act and interact with its
environment.

Systems are of two types:

6.Closed system: if closed system has no interaction with the outside world.
7.Open system: continually interacts with its environment. All living systems are open system.
Features of Systems Approach to Management
1.An organisation consists of many sub-systems.
2.All the sub-systems are mutually related to each other.
3.The sub-parts should be studied in their enter-relationships rather than in isolation from each other.
4.The organisation provides a boundary, which separates it from other systems. It determines which parts
are internal and which parts are external.
5.The organisation is responsive to environmental effect. It is vulnerable is the changes in environment.
6.An organisation is a system consisting of many interrelated and interdependent parts or sub-systems.
These elements are arranged orderly according to some scheme such that the is more than the sum of the
parts.
7.As a system an organisation draws inputs (energy. Information, materials, etc.). From its environment. It
transforms these inputs and returns the output back into the environment in the form of goods and
services.
8.Every system is a part of a super system.
9.Organisation is an open system and it interacts with its environment. It is also a dynamic system ass the
equilibrium in it is always changing.
10.Management is expected to regulate and adjust the system to secure better performance.
11.Management is multidisciplinary as it draws and integrates knowledge from various disciplines.
IMPORTANCE OF SYSTEMS THEORY
Here are some areas where systems theory can be of help in a modern workplace:
1.STRATEGIC PLANNING
Understanding how an organization functions is important for managers who are involved in strategic planning. They
need to know how various departments work together and affect each other. This is where the systems theory of
organization is very helpful. It allows managers and other decision-makers to look at things like organizational change
and organizational development from a broader perspective.
2.MANAGING CHANGE
Looking at the big picture instead of looking just at the individual functions and aspects of an organization can be a
valuable tool for those who need to make changes in an organization or who want to implement new initiatives within
their businesses.
3.PROJECT MANAGEMENT
With large, multi-stakeholder projects, a systems approach allows for clear planning and delegation from the outset. It
helps managers account for the interdependence between different verticals in an organization and assign ownership to
achieve collective goals.
In large organizations and projects, systems theory forms the basis for many popular management techniques and
practices.
DRAWBACKS OF THE SYSTEMS APPROACH TO MANAGEMENT
For everything the systems approach gives us, there are some shortcomings too. Here are a few points to consider when
working with a systems approach:
•NOT PRESCRIPTIVE ENOUGH
In the systems approach, managers aren’t focused on reaching a single goal but on working to make sure that all units of an
organization function together towards a collective goal. In this theory, they don’t discourage managers from considering
other approaches when looking for ways to improve their businesses. That could be a strength, but it could also be a
weakness if a manager needs a more rigid, prescriptive system.
If such a problem arises, systems theory has provided the basis for other management theories such as the balanced
scorecard and total quality management. Managers can look to these for guidance.

•CAN BE HARD TO MOTIVATE INDIVIDUALS

Some organizations have tried to adopt this approach and found it’s not a good fit for them. In a systems approach to
management, they encourage managers to focus on making sure that all aspects of the organization work together in order
to achieve the collective goal. But this can be difficult to explain to employees, and not all of them will find inspiration in
such an approach either.

•CALLS FOR A RESPONSIVE ORGANIZATION

The systems approach says that managers should work on not only the outputs of an organization but also on its underlying
processes. Managers should focus on solving problems and adjusting their units when they don’t work together correctly.
This requires accurate and timely diagnostics and problem-solving, and an adaptable organization that can be nudged in the
right direction.
2.4 Contingency Approach
• What is Contingency or Situational Approach to Management Theory?
• The contingency approach, often called the Situational Approach is based upon the premise that all management is
essentially situational in nature. All decisions by managers will be affected (if not controlled) by the contingencies of a
given situation.
• There is no one good way to address any decision. Contingencies arise from various environmental factors. As such,
managers must take into account these contingencies when making decisions that affect the organization.
• Contingency theory builds upon accepted elements of System Theory. It recognized that an
organization is an open system made up of interrelated sub-units. It adds, however, that the behavior
of individual sub-units is contingent upon internal and external environmental contingencies.
• These might include the relationship between two other sub-units or external systems. This is
particularly true when these internal or external units/systems have an effect on the desired outcome
of a sub-unit.
• Contingency theory also proposes structural changes or designs, leadership styles, and control
systems in an organization that allow it to react to environmental contingencies.
 primary characteristics of the Contingency Approach
The primary characteristics of contingency theory include:
•Non-universality of management theory - There is no one best way of doing things.
•Contingency - Management decision making is contingent upon the situation.
•Environment - Managerial policies and practices to be effective, must adjust to changes in the environment.
•Diagnostics - Managers must possess and continue to improve diagnostic skills so as to anticipate and ready for
environmental changes.
•Human Relations - Managers should have sufficient human relations skills to accommodate and stabilize change.
•Information and Communication - Managers must develop a communication system adequate to deal with environmental
changes.
How do Contingencies Affecting Organizational Structure?
Theorists Burns and Stalker, in their text "Management of innovation" (1968), identified two types of organizational structure
(mechanistic) and (organic) and two categories of the environment (stable and dynamic).
Mechanistic structures are more common in stable environments. Organic structures are more common and suitable in
dynamic environments.
The commonly-identified contingencies influencing organizational structure include:
•Organization Size
•Nature of Business and Technology (the need for customization)
•Environmental Uncertainty
•Individual Differences or Organizational Preferences
The contingency approach defines not only patterns of internal interaction but also suggests organization designs and
management approaches most appropriate for specific situations.
Advantages and Disadvantages of Contingency Theory
The primary advantages of contingency theory include:
•It provides a realistic view of management and organization.
•It discards the universal validity of principles.
•Managers are situation-oriented and not stereotyped.
•Lends itself to an innovative and creative management style.

The negatives of contingency theory include:

•It does not have a theoretical base.
•Executive is expected to know all the alternative courses of action before taking action in a situation that is not
always feasible.
•It does not prescribe a course of action.
•A situation can be influenced by many factors. It is difficult to analyze all these factors.